The Shanghai No. 1 Intermediate People's Court determined that BTC is a virtual property on the Internet and should be protected by law

On May 6, the Shanghai No. 1 Intermediate People's Court (hereinafter referred to as the Shanghai No. 1 Intermediate Court) publicly pronounced a case appealing a foreign-related property damage compensation dispute involving Bitcoin. The second instance determined that Bitcoin is a virtual property on the Internet and should be protected by law. Bitcoin obtained through illegal means should be fully returned or compensated at a discount.

On June 12, 2018, Yan Dong, Lu Fang, Zhang Fei, and Fu Yun (Malaysian nationality) went to the residence of Peter (American nationality) and his wife Wang Xiaoli, controlled their mobile phones, restricted their freedom, beat and threatened Peter and Wang Xiaoli, and forced them to transfer the 18.88 bitcoins and 6466 Skycoins they held into the accounts designated by Yan Dong and others.

After the court hearing, it was determined that although there was an economic dispute between the two parties, there was no evidence to prove that Peter and Wang Xiaoli were at fault. Yan Dong and the other four expressed their willingness to return the Bitcoin and Skycoin obtained from Peter and Wang Xiaoli during the trial. In the end, the court sentenced Yan Dong, Lv Fang, Zhang Fei, and Fu Yun to fixed-term imprisonment ranging from six months and fifteen days to eight months for the crime of illegal detention.

However, Pete and Wang Xiaoli never received the Bitcoin and Skycoin that Yan Dong and others promised to return, so they filed a lawsuit.

The court of first instance ruled that Yan Dong and four others should jointly return 18.88 bitcoins and 6,466 skycoins to Peter and Wang Xiaoli. If they cannot return them, they should pay compensation of 42,206.75 yuan per bitcoin and 80.34 yuan per skycoin based on the closing price of bitcoin and skycoin published on June 12, 2018 by the cryptocurrency market website CoinMarketCap.com and the dollar exchange rate on that day.

Yan Dong and the other four people were dissatisfied and appealed to the Shanghai No. 1 Intermediate People's Court. The four people believed that the current Chinese law does not recognize the property attributes of Bitcoin and Skycoin, and does not regard Bitcoin and Skycoin as objects or property in the sense of Chinese law, so Peter and Wang Xiaoli do not have the right to request the return of property rights.

In the second trial, Pete and Wang Xiaoli made a written statement that they voluntarily gave up the pursuit of 6,466 Skycoins from Yan Dong and four others, but insisted on pursuing the Bitcoin.

After hearing the case, the Shanghai No. 1 Intermediate People's Court held that this case was a dispute over compensation for foreign-related property damage. The infringement occurred within the territory of my country, the habitual residence of both parties was within the territory of my country, and the two parties did not agree on the law applicable to the dispute, so this case was governed by Chinese law.

Image source: Shanghai No. 1 Intermediate People's Court Regarding whether Bitcoin has property attributes and whether it should be protected by law, the Shanghai No. 1 Intermediate People's Court believes that Bitcoin is a kind of online virtual property and should be protected by law. Because Bitcoin has the characteristics of value, scarcity, and disposability, it has the characteristics of the object of rights and the commodity attributes of virtual property, and meets the constituent elements of virtual property.

So, should Yan Dong and the other four return the Bitcoins? If they cannot return them, should they compensate Pete and Wang Xiaoli for their losses and how should the amount of compensation be determined?

The Shanghai No. 1 Intermediate People's Court held that the actions of Yan Dong and the other four people violated Peter and Wang Xiaoli's rights to possess, use, benefit from and dispose of the disputed bitcoins. According to the effective criminal ruling, Yan Dong and the other four people voluntarily returned the property obtained from Peter and Wang Xiaoli. Therefore, regardless of the legal provisions or the promises made by Yan Dong and the other four people in the lawsuit, Yan Dong and the other four people should return the disputed bitcoins to Peter and Wang Xiaoli.

In this case, CoinMarketCap.com is not a virtual currency transaction price information publishing platform recognized by my country, and the transaction price data of Bitcoin on the website cannot be directly used as the standard for determining losses. In the second instance trial, both parties agreed that if the return could not be made, they agreed to calculate the compensation amount at 42,206.75 yuan per Bitcoin. Therefore, the facts found in the first instance were clear and the judgment was not improper.

In the second trial, Pete and Wang Xiaoli expressed their willingness to give up the pursuit of 6,466 Skycoins, and the Shanghai No. 1 Intermediate People's Court approved it.

In summary, the Shanghai No. 1 Intermediate People's Court made corresponding changes to the relevant content of Skycoin in the first-instance judgment, and maintained the other contents of the judgment.

(All names used in this article are pseudonyms) (Jiemian News)